Sunniva Kolostyak: We’re in the middle of earnings season and this week, we’ve seen a lot of company reports issued, which you can read all about on our sites. For this week’s stock of the week, though, we’re looking across the pond to Meta Platforms (META), the parent of Facebook and Instagram.
The company posted better-than-expected earnings, with revenue increasing 23% from last year. But this was not enough to persuade the markets. Meta’s share price first rose in after-hours trading but ended 3% down.
Meta did warn about lower advertising demand, which could have spooked some investors. But also Alphabet (GOOGL), the Google parent that reported earlier this week, saw a significant share price drop because of slow cloud computing growth – despite all-round decent results. Some investors think this could be the signs of a wider tech sell off.
Back to Meta. Our analysts say there are some concerns that the company could be too reliant on Chinese spending, while US-China relations are still an issue. But Morningstar also thinks that Meta’s strong network effect will keep attracting ads that are less affected by geopolitical issues.
The results also show how the company is succeeding in using AI for data analytics, campaign planning and measurement. Morningstar has slightly increased the fair value estimate, to $322 from $311, because of an increase to the operating margin assumption.
All in all, Meta’s share price at close was $299, which places it in 3-Star territory and within a range we consider to be fairly valued.
For Morningstar, I’m Sunniva Kolostyak.
